Bitcoin and Mobile Payments (eBook)

Gabriella Gimigliano holds a Ph.D. In banking law and law of financial markets and she is currently a lecturer in business law at the University of Siena, Italy. 

Preface 6
Approaching Mobile Payments and the Bitcoin within the EU Framework: Rationale and Aims of the Study 6
Rationale of the Study 6
Aims of the Study 12
About this Book 14
Reference 15
Acknowledgements 18
Contents 20
Contributors 24
List of Boxes 28
List of Tables 30
Part I: Institutional Strategies and Economic Background 31
1: The Regulatory Machine: An Institutional Approach to Innovative Payments in Europe 32
Introduction 33
The Debate on an Innovation-Friendly Regulatory Environment 33
The Institutional Strategies for the Development of the Market for Innovative Payments 37
Innovation and Competition 37
Innovation and Financial Integration: The SEPA Project 42
Innovation and Security 43
The Role of the Authorities 44
The EU Commission 45
The European Banking Authority 46
The ECB and the Eurosystem Role 49
Conclusions 52
References 53
2: Economic Issues on M-Payments and Bitcoin 55
Introduction 56
Issues on Mobile Payments 58
Issues on Bitcoin 63
How the Scheme Works 65
Why Use Bitcoins? 70
Perspectives and Criticism 73
References 77
Part II: The Framework: A European and Comparative Outline 80
3: Bit by Bit: Assessing the Legal Nature of Virtual Currencies 81
Introduction 82
Virtual Currencies and Money 85
Virtual Currencies and Electronic Money 87
Virtual Currencies and Complementary Currencies 88
Virtual Currencies and Payment Services 90
Bitcoins and Investment Contracts 92
Virtual Currencies and Taxation 94
Challenges for the Regulator 95
References 97
4: Mobilizing Payments Within the European Union Framework: A Legal Analysis 98
Introduction 99
The Self-Regulatory Approach and the Business Models 101
The Institutional Framework for Payment Services 105
M-Payments and Payment Services in the PSD 105
M-Payments and Payment Services in the (forthcoming) PSD2 109
M-Payments and the E-Money 110
Conclusions 112
References 113
5: A Fuzzy Set in the Legal Domain: Bitcoins According to US Legal Formants 114
Introduction 115
Cryptocurrencies and Virtual Currencies 116
National Regulatory Attempts and Reactions 119
The USA 124
US Courts’ Classificatory Attempts 127
US Potential Regulatory Frameworks for Bitcoins 132
Bitcoins: Currency or Commodity? The Legal Theory’s Viewpoint 136
Conclusions 141
References 143
6: M-Payments: How Much Regulation Is Appropriate? Learning from the Global Experience 146
Introduction 147
Current Approaches to Regulate M-Payments: From Kenya to the USA 149
Kenya and the Developing Countries: When Innovation Precedes Legislation 149
M-Payments in the USA: A Legal and Regulatory Maze 152
Supporting an Enabling Regulatory Framework for M-Payments 155
Conclusions 164
References 166
Part III: The Challenges 168
7: Security Issues of New Innovative Payments and Their Regulatory Challenges 169
Introduction 170
Some Insights on the Security Issues of New Innovative Payments 173
M-Payments and New Security Risks 173
Security Risks of Mobile Devices 174
Security Risks of the Payment Platform 175
Bitcoin and the Vulnerability of Its Supporting Systems 176
Security Issues of the Peer-to-Peer System 177
Security Issues of the Supporting System 179
How Security Issues of New Innovative Payments Challenge the Existing Regulatory Frameworks 181
M-Payments: The Need for a More Proper Regulation 181
Adequate Security that Encourages the Usability of the System as Basic Requirement 182
Security Requirements Under the Existing Regulatory Framework 183
Sufficient Consumer Protection Provisions 184
Bitcoin from the Perspective of Consumer Protection: Why Merely a Warning Is Not Adequate 186
New Payment Method Not Covered by Regulation 187
Said the Most Secure, But Lost/Stolen and Breaches Keep Occurring 188
Do the Proposed Regulatory Frameworks Suffice? Elaboration on the Proposal of the PSD2 and the Way Forward 190
M-Payments Under the Proposal for Revision of the Payment Services Directive and Security Recommendation 190
Security Regulation Under the Proposal of the PSD2 191
Security Requirements Under the Proposed Recommendation 193
Consumer Protection Provisions Under the Proposal of the PSD2 194
Analysis of the Proposed Frameworks 194
The Proposed Directive on Network and Information Security (NIS) to Cater for Bitcoin Supporting Systems: Proposal to Regulate Bitcoin Exchange 195
Bitcoin Under the Proposal of the PSD2 195
Bitcoin Under the Proposed NIS Directive 196
Conclusion 198
References 200
8: EU Data Protection and Future Payment Services 204
Introduction 205
The Moving EU Data Protection Landscape 206
Data Protection for the New Payment Services Directive 209
Data Protection in the New Payment Services Directive 210
Missing Data Protection Safeguards 213
Minimizing Data Exchanges: A Real Privacy Measure 215
Mobile Payments in the Waiting Line 216
Mobile Payments and EU Data Protection 218
EU Data Protection and Alternative Currencies 220
Concluding Remarks 222
References 222
9: The Classification of Virtual Currencies and Mobile Payments in Terms of the Old and New European Anti-­Money Laundering Frameworks 225
Introduction 225
The Need for Regulation 227
Virtual Currencies 227
Mobile Payments 229
The Third Anti-Money Laundering Directive 2005/60/EC 232
The Material Scope 234
The Personal Scope 235
Customer Due Diligence and Reporting 238
The Fourth Anti-Money Laundering Directive (EU) 2015/849 240
The Broadened Scope 240
The New Risk-Based Approach 243
The Need for Further Integration of New Payment Methods into the Legal Framework 244
Virtual Currencies 245
Mobile Payments 248
Conclusion 249
References 251
10: Virtual Currencies, M-Payments and VAT: Ready for the Future? 253
An Introduction to Bitcoin 254
Currencies, Money and Bitcoins 255
An Introduction to EU VAT 256
Money, Payments and VAT 258
Paying with Bitcoins 260
The Case of David Hedqvist 262
The Exchange Service: Exempt? 265
Defining Bitcoin 267
Accepting Bitcoins as Payment 267
Creating Bitcoins Through Mining 268
Conclusions for Bitcoin 270
VAT and M-Payments 270
References 271
11: Mobile Payments and Merger Regulation: A Case Law Analysis 272
JV Telefónica, CaixaBank and Banco Santander (Case No. COMP/M. 6956) 273
The Definition of the Relevant Markets 274
Antitrust Regulatory Concerns on Horizontal Assessment 275
Antitrust Regulatory Concerns on Non-Horizontal Assessment 275
The European Commission’s Decision 277
JV Telefónica UK, Vodafone UK, Everything Everywhere (COMP/M. 6314) 278
The Definition of the Relevant Markets 280
Antitrust Regulatory Concerns on Non-Horizontal Assessment 281
Antitrust Regulatory Concerns on Horizontal Assessment 283
The European Commission’s Decision 284
Conclusions 284
References 288
Part IV: Conclusions 289
12: Mobile Payments and Bitcoin: Concluding Reflections on the Digital Upheaval in Payments 290
Introduction: Payment Mechanisms 291
Mobile Payments 296
Bitcoin 302
Conclusion 305
References 306
The Regulatory Challenges Ahead 307
Bibliography 310
Index 325